This news item draws attention to the ACCA's gymnastics on its accountability. Previously ACCA had argued that it was beyond the reach of the courts and that aggrieved students and members could not ask the courts to intervene in its internal affairs (Click here for more)
ACCA used its financial muscle to secure a legal precedent. This was then applied to prevent a retired member from airing his concerns in the courts. The retired member acted upon the legal precedent and wrote directly to Her Majesty the Queen and asked her to intervene in the dispute. The Queen instructed the Lord Chancellor to intervene. The Lord Chancellor's intervention meant that the state would be directly involved in the governance of the Association and its problems would be publicly aired. Now the ACCA management backtracked. It spent £100,000 to obtain a legal opinion saying that the ACCA's original position in the courts was wrong. ACCA's lawyers wrote to the Lord Chancellor to say that the ACCA had given erroneous information to the courts.(Click here for more)
Eventually the Lord Chancellor issued a judgement confirming that the ACCA's original position was wrong (click here to see the Lord Chancellor's judgement). But ACCA benefitted from its erroneous position. In particular the Lord Chancellor said that, “I am particularly concerned about the position in which Mr. Allen finds himself. I am aware, from the papers which he has submitted to me, there have been other proceedings between the Association and himself. Although, of course, I have not seen all the papers relevant to the litigation, it appears that judgement has been entered against him, in the Chichester County Court, on a claim to recover penalty imposed upon him by the Association in disciplinary proceedings. It further appears that he may have been prevented from challenging the propriety of that imposition, on the basis that that was a matter within the exclusive jurisdiction of the Visitor, rather than the Court, on the authority of the Bankole decision. If that is so, it would appear that the Association has caused Mr. Allen to lose the opportunity of addressing the court on that issue, by maintaining that it was within the exclusive jurisdiction of the Visitor, an assertion which it has now retracted. I do not know whether Mr. Allen would wish to pursue an appeal against the County Court decision, in the light of this determination, or whether at this stage, the Rules of Court would allow him to do so. However, I would expect that the Association, having necessarily acknowledged its own responsibility for the confusion which has arisen, would be zealous in supporting any application he may make, to bring the issue back before the court …..” (page 7).
After reading the Lord Chancellor's judgement read the observations below:
The public understanding is that the accountancy bodies are accountable to their current/potential members and that the aggrieved individuals, if they so wish, can have their complaints heard in courts of law. This is, inevitably, tampered by the political strategies developed by the accountancy bodies. Their relative financial and political strengths enable them to advance particular conceptions of accountability. The financial muscle enabled the ACCA to secure a legal precedent that effectively established that the courts did not have the powers to intervene in its internal affairs. It meant that the aggrieved members (and potential members) could not ask the courts to deal with perceived injustices. Having established a very favourable legal precedent, ACCA took legal action to recover £100,000 costs from Bankole (Accountancy Age, 18 September 1997, p. 7), even though Bankole was not permitted to advance his arguments in the courts. Subsequently, ACCA also used the Bankole precedent to prevent Allen from airing his concerns in the court. For the period from 1994 to 1997, the ACCA actively sought to enforce the Bankole precedent, for example in the Allen case. In that period, it took no steps to seek reversal of the legal precedent. It is only after Allen formally invited Her Majesty the Queen to exercise her Visitorial rights that ACCA became concerned. The Visitorial form of accountability had a potential to provide a relatively costless and a very public way for aggrieved individuals to air their grievances. Such a route might also have provided opportunities for greater scrutiny of the ACCA's governance in parliament. Upon realising the possible negative implications of this form of public accountability, the ACCA used its financial resources to seek reversal of the Bankole judgement. However, it did not approach the courts to cancel the judgements obtained against Bankole and Allen.
The 'rule of law' is often considered to be a powerful, neutral and objective avenue for securing public accountability and redress for perceived injustices. The episodes cited here shed some light on this form of public accountability. The Court of Appeal was asked to interpret the law relating to the visitorial jurisdiction, and the rights of the courts to intervene in the internal affairs of the ACCA - a body established by a Royal charter. The court was fully aware of Bankole’s correspondence “with the Lord Chancellor’s Department concerning the visitorial procedure and the denial by the Visitor’s office of any power to appoint in connection with the association” . However, the Court of Appeal was not convinced of the arguments and decided that the Lord Chancellor’s Department, on behalf of the Crown, had the visitorial jurisdiction.
The Lord Chancellor eventually claimed that he did not have the Visitorial jurisdiction on ACCA. The Lord Chancellor's adjudication was not held in the 'open' and sits uneasily with Article 6 of the European Convention on Human Rights which states that "In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law". For the purposes of his adjudication, the Lord Chancellor received written representations from both parties, a process which advantaged ACCA because it had considerable financial resources to hire lawyers to make its points. In contrast, no legal aid was given to Allen. The Lord Chancellor’s adjudication has not been made publicly available. It now appears that the courts, as evidenced by the Court of Appeal judgement, believe that only the Lord Chancellor, on behalf of the Crown, has the powers to adjudicate on internal affairs of the ACCA. The Lord Chancellor has argued that he has no such powers. The Lord Chancellor’s ‘private’ interpretation of law has not been tested in the open courts.
The adjudication by the Lord Chancellor raises considerable concerns about the nature of justice in Britain. Unlike the traditional model of liberal democracies, Britain does not have a separation of the executive, the judiciary and the legislature. The Lord Chancellor is a member of the Cabinet, with ministerial responsibility for the administration of justice. He is a member of the legislature, in that he is an unelected member of the House of Lords and the Speaker of the House of Lords. He is also a judge and head of judiciary. In his capacity as a judge, the Lord Chancellor overturned the legal precedents reached in open courts. There is something disturbing to democratic sensibilities in that matters of legal principles and public accountability are being decided in secrecy and away from the public gaze, with no right of appeal.
One common interpretation is that accountability should be understood in terms of responsibility to a community, or in the sense of what a community would consider to be sensible or proper conduct . However, the cases reported show that after disciplining one of its own members, a licensed auditor, ACCA felt that it was inappropriate for the person concerned to air his grievances in the courts even though the disciplinary action had material consequences for him. ACCA seemed content with its narrow view and only seemed to become concerned when its preferred mode of accountability became problematical. Seemingly, accountability is understood as what is convenient for the accountancy bodies rather than their current or potential members.
Accountability is also associated with the provision of relevant information. The ACCA's Royal Charter expressly promises to disseminate information on matters of professional interest. Possible ways of doing this may be through the ACCA's monthly magazine, its annual report and its web site. In principle, these mediums could have facilitated information about the details and the significance of the Bankole and the Allen cases. Both of these cases and the interventions by the Lord Chancellor raised questions about public policy and the accountability of ACCA to its members. The events were also new and novel, as we are not aware of any previous instance when a Royal Chartered accountancy body had argued that its internal affairs were beyond the reach of the courts. However, despite the very public events (e.g. the Court of Appeal decision, court cases, announcement by the Lord Chancellor in Parliament), we have been unable of find any mention of them in the ACCA's in-house magazine, its annual report or web site. Seemingly, the accountancy bodies control the contents of their official media, preferring silence on problematical events.
The Department of Trade and Industry (DTI) has the ultimate responsibility
for overseeing the good governance of the bodies acting as regulators (under
the Companies Acts 1985/1989) of the auditing sector. Some formal accountability
of the regulator role is secured through an annual report (under Section
37 of the Companies Act 1989) submitted by the ACCA to the Department of
Trade and Industry (DTI). The reports could have discussed the implications
of the Bankole/Allen cases and the Lord Chancellor's adjudication, especially
as they had some bearing upon the regulation of auditors (Allen was a licensed,
albeit retired, auditor). However, they have remained silent. Despite the
Lord Chancellor's adjudication, the DTI has not intervened to enable Allen,
a licensed auditor, to have his grievances heard in the courts. Despite
privately acknowledging its erroneous legal position to the Lord Chancellor,
ACCA has not been required to make a public statement.